Correlation Between Fast Retailing and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Canlan Ice at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fast Retailing and Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Canlan Ice Sports, you can compare the effects of market volatilities on Fast Retailing and Canlan Ice and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fast Retailing with a short position of Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Canlan Ice.
Diversification Opportunities for Fast Retailing and Canlan Ice
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Canlan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports and Fast Retailing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fast Retailing Co are associated (or correlated) with Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Fast Retailing i.e., Fast Retailing and Canlan Ice go up and down completely randomly.
Pair Corralation between Fast Retailing and Canlan Ice
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Canlan Ice. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.04 times less risky than Canlan Ice. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Canlan Ice Sports is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Canlan Ice Sports on October 7, 2024 and sell it today you would earn a total of 3.00 from holding Canlan Ice Sports or generate 1.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fast Retailing Co vs. Canlan Ice Sports
Performance |
Timeline |
Fast Retailing |
Canlan Ice Sports |
Fast Retailing and Canlan Ice Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fast Retailing and Canlan Ice
The main advantage of trading using opposite Fast Retailing and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Canlan Ice can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canlan Ice will offset losses from the drop in Canlan Ice's long position.Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
Canlan Ice vs. Carnival Plc ADS | Canlan Ice vs. Shimano | Canlan Ice vs. Shimano Inc ADR | Canlan Ice vs. BANDAI NAMCO Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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